Is foundry broker model the next thing in fabless business?

Is foundry broker model the next thing in fabless business?
By Mark LaPedus, Semiconductor Business News
May 24, 2002 (11:36 p.m. EST)
URL: http://www.eetimes.com/story/OEG20020524S0081

SAN JOSE -- A little-known company, called Alpha Technologies Inc., here has surfaced and announced plans to expand what could be considered an unusual business model for semiconductors: the "fabless silicon foundry" service.

Seven-year-old Alpha Technologies said it has recently struck alliances with two silicon foundry providers, including NEC Electronics Inc. of Roseville, Calif., and Quicksil Inc. in San Jose to expand its business. Under the terms of non-exclusive deals, Alpha Technologies will act as a third-party marketing and sales agent for the respective foundry services at NEC Electronics and Quicksil.

Alpha Technologies itself does not own a wafer fab, although the San Jose-based company describes itself as the leading member of a loosely-organized "wafer foundry consortium."

By "consortium," the company means that it represents, markets and buys fab capacity from an appointed group of specialty foundry providers on a non-exclusi ve basis. The company said its roster of specialty foundry providers offers a variety of chip technologies, such as high-voltage, mixed-signal, radio-frequency (RF), silicon-germanium (SiGe), and others processes.

Alpha Technologies essentially serves as a "value-added broker" or matchmaker for customers seeking specialty foundry services, explained Jason Tomko, president and chief executive of the company.

"Our model is to represent the specialty foundries," Tomko said. "We don't compete or work with the large CMOS foundries, such as Chartered, TSMC and UMC," Tomko said, referring to the "Big Three" foundry providers in Asia.

But still, Alpha Technologies aims to play a key role in the semiconductor supply chain, Tomko said. "Finding an ideal match between an IC maker and a process technology is not a trivial task," he told SBN in a recent interview. "We can also help facilitate the IP process flow for customers."

It's unclear if the "foundry brokerage" or "fabless foundry" model w ill take off in the IC market, according to analysts. Some believe that the "foundry brokerage" business will remain a niche-oriented service for select customers, and it will see ups and downs in the boom-bust cycles of the chip industry, market observers said.

But Alpha Technologies insists that its model is already a major success. And the company claims to be the world's first and only company that offers "foundry brokerage" services in the marketplace.

Some analysts believe that the company's closest rival is the MOSIS Service, which provides low-cost prototyping and small-volume chip production services for customers. Based in Marina del Rey, Calif., MOSIS also does not own a wafer fab, but it does utilize several appointed foundries, such as IBM Microelectronics, Taiwan Semiconductor Manufacturing Co. Ltd., and others.

MOSIS also offers a multi-project wafer service, which is designed to lower the cost of chip fabrication by sharing multiple designs on a single substrate and photomask set s. It also provides other services, such as photomask generation and IC packaging.

Alpha Technologies appears to be moving in the direction of MOSIS' business model, according to analysts. Since its inception in 1995, the company has only offered foundry brokerage services, acting mostly as a middleman between chip production plants and customers.

But now, the company appears to be expanding its own model. Alpha Technologies will shortly offer a multi-project wafer service on a limited basis, while also significantly expanding its own "consortium" or roster of foundry partners.

It currently represents six foundry companies, which are based in Asia, Europe and the United States. The company's latest foundry partners include NEC Electronics and Quicksil.

Last year, NEC Electronics--the U.S. chip arm of Japan's NEC Corp.--set up a new organization in Roseville to focus on four key areas, including foundry services. The move was part of major restructuring effort at the Japanese chip maker (see < A HREF="http://www.siliconstrategies.com/story/OEG20010517S0073"> May 17, 2001, story ).

Alpha Technologies is now marketing NEC Electronics' 0.25- and 0.18-micron BiCMOS foundry processes, according to Tomko. Alpha Technologies is also peddling specialty foundry processes at Quicksil, which operates a small 5-inch wafer fab in San Jose. Quicksil specializes in developing discrete, high-voltage and related processes, Tomko said.